Andersen to appeal conviction but quit audit work

Andersen says it will appeal a Texas jury's finding that it obstructed justice in the Enron bankruptcy scandal, but acknowledged on the weekend that the guilty verdict would destroy what is left of the company's core accountancy business.

In a statement, Andersen said it would base its appeal against the criminal conviction on "flawed jury instructions and erroneous evidentiary rulings". But it also said it expected to stop auditing publicly traded companies by the end of August, in accordance with Securities and Exchange Commission rules, and admitted that the trial outcome "will effectively end the firm's audit practice".

After 10 days of nail-biting deliberation, the jury in Houston decided on Saturday that Andersen was institutionally responsible for the illegal shredding of thousands of Enron documents last autumn. The US energy giant was hurtling towards self-destruction at the time following the revelation that it had falsified its financial health and kept billions of dollars in debt off the books in a series of offshore investments of questionable legality.

The ensuing scandal has reduced Andersen to a shadow of its former self, with corporate clients jumping ship in their hundreds. The company's US operations, which once employed 27,000 people, have shrunk to barely one-third of their former size.

The trial proved to be a tougher nut to crack than the prosecution expected, largely because the star government witness, the former manager of the Enron account at Andersen's Houston office, was more equivocal about the way the shredding occurred than he had been when he first decided to turn state's evidence.

The guilty verdict will embolden investigators still hard at work unpicking the whole Enron mess. Leslie Caldwell, head of the Justice Department task force on Enron, said of the verdict: "It sends a strong message that we will get to the bottom of the Enron débâcle and find those people responsible."